In the midst of all things AI, I find myself reflecting on another transformation that seems to be getting shortchanged – a new type of labor movement.
And so, with Labor Day around the corner, I am borrowing Sunny Day Fund’s blog today to share my reflections on those trends.
We still need workers, especially in healthcare, hospitality, manufacturing and logistics
Let’s start with some data – on August 29, 2023, the Bureau of Labor Statistics shared its Job Openings and Labor Turnover report. Even though the number of job openings have decreased from all-time highs, there are still a whopping 8.8 million jobs left unfilled. The biggest industry gaps are in health services and hospitality, and the geographic South is faring the worst.
Let me put this to you in a different way – when I went in for an appointment last Friday at one of our region’s largest health providers, I found myself waiting over an hour in a full hall. Of course, being curious, I started looking into – and asking – what’s causing the delay. The answer was an understaffed office, made worse with a bunch of recent turnover. There are real costs to labor turnover, and it’s not hard to imagine how this also impacts the hospital’s revenue over time due to poor quality of care.
Generative AI will make labor different
Funnily enough, at least in the news I’ve read, it feels like the main storyline is less focused on how crucial labor remains to our market and more focused how AI will replace labor across all industries.
I agree that generative AI built on rapidly more efficient processing infrastructure is game changing. The need for a human in the loop has indeed decreased significantly across many use cases. And unfortunately, I also agree that fewer individuals are reaping the harvest of economic gains from this technology, potentially leading to further inequality.
However, we can’t equate task efficiency to labor reduction – that’s a mistake. I believe we still need people. Those people will need a newer, continuously evolving set of skills, irrespective of the industry (e.g., Certified Nursing Assistants managing care better and manufacturing frontline workers increasing output with better quality with new tools). Within our own company, we are challenging each other to do just that.
But this is a fundamentally different “worker” – irrespective of the industry. They’re no longer finishing a task, they’re now creating value in different parts of the company.
So why can’t the employee-employer social contract also evolve?
This isn’t Labor’s last gasp, it’s an evolutionary moment
I think we’re seeing signs of that evolution across the US (and the world) because of our changing expectations of our workers. Two trends that excite me are the data-driven emphasis on job quality and enabling equitable outcomes via employee ownership.
Job Quality
As we recovered from the Great Recession and as unemployment surged (hey, one of those was me!), the immediate focus was jobs, jobs, jobs. It meant any income at any cost. Then, the economy gained traction, boomers started exiting, new skillsets became more important, data behind inequities became more easily available, and – most importantly – cost of living started spiking. All of which contributed to the pendulum of labor power swinging back towards workers.
These forces all were in play even before the pandemic or inflation, like a diabetes patient on the verge of a heart attack or stroke. Those disasters only expedited the treatment plan.
So what is the treatment? Good jobs, or job quality, is a part of it. Turns out that employees that feel economically and emotionally free can get some amazing things done, which in turn makes the company even better. Creating that economic and emotional freedom starts with stability and resilience, which is why we’ve seen the proliferation of focus on pay and benefits, like emergency savings. Both the Good Jobs Institute and Aspen Institute have great resources here, and organizations like Lafeyette Square are actioning these strategies via impact investment models.
National initiatives, like the CHIPS Act or the Inflation Reduction Act, embed and amplify this strategy. Yes, these bills unlock hundreds of billions of dollars of investments, but they do so conditionally on the creation and sustained existence of good jobs. That’s powerful.
Employee Ownership
In my opinion, employee ownership is a significant part of the labor evolution because it builds on stability to unlock larger sums of wealth. While that sentiment has existed in co-ops, ESOPs, and smaller tech companies, what I am seeing is a broader realization by company leadership to align significant company outcomes with the labor engine that enables those outcomes.
Instead of concentrating large payouts to a select few, everyone now can have at least a year’s worth of salary upon a successful exit. I’ve been following stories like the KKR’s sale of C.H.I. Overhead Doors to Nucor, leading to a payout of $175K on average across 800 employees. This is incredible, and life changing – and possible thanks to the incredible efforts of those workers.
That model is being proliferated by organizations like Ownership Works and Ownership America (check out their win in Massachusetts), and I am excited to continue to see more wins.
More union deals to come after UPS
Just this month, the negotiation between UPS and their union workers culminated in historic fashion – with unprecedented wage and benefit gains for workers, and peace of mind for a company that moves America.
Some may look at this deal as UPS yielding to its union counterparts, but I think it’s a different story – I believe this investment will secure fierce loyalty, and much like the ownership play, drive operational efficiency powered by pride. As Beneficial State Bank CEO Randell Leach said in a recent Fortune article after his bank became the first to unionize in 40 years,
“if business leaders want happy employees and good business outcomes, they’ll need to embrace a more collaborative and compassionate approach–one centered on worker empowerment.”
Many other deals are expected to follow suit behind UPS, it’s inevitable now. In doing so I believe we’ll add to the momentum towards greater employer-employee parity and economic welfare for all. Irrespective of whether employers want to work with unions or not, I believe that the market expectation is now set for the employee to be an indispensable stakeholder.
What the future of Labor will mean for emergency savings
Where does that leave us at Sunny Day Fund, with our mission to enable financial well-being for all hardworking Americans? Simply put, I think all of the above trends fall in our favor – yes, we deliver what employees want, but it’s also very much aligned with what employers need. In short, I am very excited about the future of Labor.
Thanks for taking time to read my reflections. If you’d like to share yours, send a note to contact@sunnydayfund.com – we’d be happy to include your thoughts in our next newsletter.
Sid Pailla wrote this opinion piece in reflection of the 141st Labor Day.. Ideas presented do not necessarily reflect those of the company, its employees, or its board.
